tv Bloomberg Bottom Line Bloomberg October 15, 2014 2:00pm-3:01pm EDT
on the markets again in 30 minutes. ♪ >> from bloomberg world headquarters in new york, i'm mark crumpton. this is "bottom line." we begin with breaking news. the release of the federal reserve's page book. reports from the 12 regional banks of the u.s. federal reserve system. peter cook joins me with the details. >> good afternoon. so many questions right now about the strength of the u.s. economy and the strength of the global economy at this moment. a snapshot of conditions around the country.
it does not suggest an economy hitting overdrive. the 12 districts generally describe modest to moderate economic growth since the last beige book. five report modest growth. moderate is better in fed speak. austin is a mixed picture -- boston is a mixed picture. the beige book suggests retailers in many parts of the country are feeling pretty good. overalltricts reported growth in consumer spending that ranged from slight to moderate. reported thatcts retailers were optimistic about the remainder of the year. boston, chicago, dallas and tense o san francisco remained n that list. several districts reported non-financial services growing at a moderate pace. with capacity constraint reported in some places.
pretty good news on the manufacturing front. manufacturing activity increased in most districts. residential construction and real estate activity mixed since the last report. commercial construction grew in most districts. mixed asral conditions well. crop prices dropping thanks to strong the unexpected production and energy -- oil and natural gas production increased from already high levels and not much changed on the all important jobs of wage funds. of districts characterized overall wage growth as modest. price pressures overall remain subdued according to the report. no major changes to the last
beige book. certainly nothing to indicate the economy is taking off or grinding to a halt. >> peter cook, thank you for we will have more on the beige book coming up. we will have analysis in 10 minutes. to the story of this day. global stocks falling for a fifth day. the s&p 500 dropped to its lowest level since april. julie hyman is watching the and lisa isket tracking the moves in the bond market. thank you so much. we are trying to find a name or a description for what's going on today. what is happening to the markets? >> we are seeing an acceleration of the selling we had over the past few weeks. it is a number of different concerns that seem to be hitting all at once. this morning come you had the
headlines that a second patient who had contact with the texas been patient has now diagnosed with the ball appeared that is hitting early in the morning. -- has now been diagnosed with ebola. that is hitting early in the morning. the result was the selloff. so, we past half hour or have been at the lowest of the session. down thend s&p both most we have seen since november of 2011. all three major averages erasing their gains for the year. itn you see this selling, causes concern and people want to bailout of the market.
we will see if the floor gets set in the market overall. the selling is broad-based. when angels, technology, you name it. >> lisa is joining me here in studio. you are following the bond market. >> a dramatic day in bonds. down to thelds lowest level since december of 2012. pretty significant moves. the tenure has dropped the most since 2009. question inassive the market about whether investors are -- they go in and buy treasuries to cover their shorts. there is some speculation that is fueling today's move. a lot of concern about the global slowdown in the u.s. beng able to being unable to
immune to the slowdown in europe. jeff,ning us from boston, chief global strategist at charles schwab. welcome to "bottom line." is this something that is overdue or something else going on in the markets? able to say it is overdue in the sense that the centeredhis growth is on the deflation concerns coming out of europe and commodity prices have led us stocks lower. oil peaked back in june. other commodities peaked in the late spring. commodities have been signaling deepening concern over deflation for some time. commodities ash the leading indicator of when this decline might be over. putting aat least
target on this. europe,arting from starting from those headwinds in europe. what about the economic news we are hearing in the unites states? -- united states? concerning.enuinely the global bastion of strength now showing some signs of concern. the december retail sales numbers not what everyone had hoped it would be. the u.s. is in much better shape than the rest of the world. the u.s. picture is still quite a bit better than what we are seeing overseas. certainly, there are concerns here as well as we are going through a global growth scare. fed at some point was
hinted or intimating this was the top of the headwind they were looking at. jerry yellen was saying that her main concern was housing. -- chair yellen >>. we heard fed governors say we are watching the situation globally. he said that, the market trod. -- market shrugged. investors are trying to include the effects of ebola, which is a huge unknown at this point. this is not going to be a widespread problem. every time you get a new headline on it, the market operates on logic. you do see these swings in sentiment related to these concerns over ebola or some of the other global growth concerns. economy is on
solid footing. when you see an ebola headline, that can be a scary thing on a human level and we see that affecting the market. you've been talking with people for the course of the past few weeks. >> people started to see more strengthen the treasury markets. people started piling back into the more safe haven investments. more than $1 billion went into u.s. government debt exchange traded funds. money has been moving back. biggest leading indicator has been the price of oil. that speaks to the possibility of deflation and the possibility of her family slowing growth globally -- profoundly slowing growth globally. let me get you the last word
in here. lisa talked about how quickly this has happened. did you see any indicators coming up within the past few days or so? you have to come back to commodities. they have been falling -- oil has been falling sharply. continue to watch that as an indicator of when we might find some firmer footing here. fed haven't for the changed. the markets are still pressing in. june of 2015 is the first time the fed hikes rates. they have not priced in any more of a response from the fed. commodities are responding to that and stocks are as well. much.nk you all so coming up, reaction to the beige book. an outlook on the economy in light of the fed's beige book.
>> let's get you to the other top stories we are following today. a second texas health worker who tested positive for ebola flew to cleveland and back before reporting she had symptoms of the deadly virus. u.s. officials are tracking 132 others for the flight. investigations increasingly suggest the first several days before the patient was diagnosed appeared to be the eriod.t risk p these two health care workers both worked on those days and both had extensive contact with the patient when the patient had extensive production of body fluids because of a vomiting and diarrhea. >> officials say the second
health care worker was in isolation at a dallas hospital within 90 minutes. >> we want to minimize rumors and maximize facts. we want to deal with facts, not fear. i continue to believe that while dallas is anxious about this and with this news this morning, and anxiety level goes up a level, we are not fearful. >> it is not clear how the woman contracted the virus during care she provided for thomas eric duncan. now in talksis with emory university hospital about transferring the latest asian to the atlanta facility -- latest patient to the atlanta facility. public anger after officers were seen kicking a handcuffed protester in hong kong. local media channels released
video. a member ofy shows the civic party taken by several police officers to a corner and repeatedly hit and kicked. officers armed with right shields, batons and hairspray knocked activists to the ground and tore down barricades protesters used under the underpass outside of government and orders. bank of america posted a income was $168 million. wereted earnings per share $.40. that beat the $.32 average estimate. retail sales retreated in september as purchases of autos, gasoline and furniture slowed.
a sign that recent job gains have yet to significantly boost consumer spending. the commerce department said seasonally adjusted retail sales dropped 23%. -- dropped .3%. global economic concerns appear to be having a significant impact on the financial markets. , welcome back to "bottom line." we've been covering this all day . is it because of the weak economic data or are we seeing the correction that has been overdue? >> we are seeing many corrections and heightened market volatility. lots of times, that will escalate along the way to a big market right which seems to be what we have been getting in the past few days. the are legitimate concerns over global growth. we did out of germany.
germanydata out of indicating an unwillingness to --s roadblock to the eaves indicating a roadblock to the ecb. if these growth concerns are realized, what does that mean about the prospects for u.s. growth? that would hamper the u.s. outlook. if you look at coincident data , there is. economy nothing there in the data yet that suggests we are growing less than the 3% average we have slated for the second half of this year. >> those headwinds from overseas from some of the eurozone ebolaies and the fears of -- is that weakness making its way over here? >> we have yet to see it in the
data. that does not mean the u.s. is going toree and we are have global growth concerns and geopolitical concerns and world breakout of disease concerns that won't impact the u.s. if those do impact global growth, they would impact the u.s. those concerns are warranted. as of right now, the data on the is telling us that everything is steady as she goes. there are forward-looking indicators to look at. do we realize jobless claims have started rising? do we see that consumer sentiment starts to tank? does job growth slow? those are the kinds of things we are looking for. we are tracking about 3% growth in the u.s. economy and that is the average we are looking at for the second half. beige book was
released, peter cook was giving us the highlights. businesses were generally optimistic as economic activity continued to grow. at a modest to moderate pace. what does a modest to moderate pace mean in terms of a growth pattern going forward for the u.s.? >> it doesn't equate to a particular percentage of growth in the u.s. economy. it means 2%. accelerating these 3% or more. it means more of the same could we have been tracking about 3% growth in the third-quarter to. we're moving into the fourth quarter tracking about the same. that more of same is in place. are more upbeat for the holiday shopping season. this is something we covered lately as well. lower gas prices in the short run are a boom to the consumer
sector. it boosted real consumer spending by .2% in the third quarter. a .6% boosting at if these gas prices remain lower throughout the fourth quarter. will beonal average less than three dollars in the fourth quarter. of freed upt discretionary income that consumers can spend elsewhere. about ae talking tobacco tax cut for americans. -- a do fact oh tax cut for facto tax cute for american. is purchasing power going to reveal itself? >> the purchasing power is there. real incomes are up. growth had stagnant wage . but we have been creating
200,000 jobs a month. aggregate income is up quite strongly this year. it is not the ability of the consumer to spend, but the willingness. expectationsncial -- yes, we see better financial gains. my balance sheet looks better. i have stronger income this year but i'm not convinced that will continue. therefore, they are not spending that much as they could be. , always a pleasure. of next, we get back to julie hyman and track the selling on wall street. "bottom line" continues in just a moment. ♪
>> it is 26 minutes past the hour. bloomberg television is on the markets. i'm joined by julie hyman who has been following the market selloff. >> we've been on the markets quite a bit today. let's look at where stocks stand right now because we have had an unusual level of volatility during the session. picked up the past few weeks but even more so today. the s&p down more than 2%. near the lows of the session. we have not talked about individual movers. bank of america came out with earnings this morning and shares are falling by the most in almost six months. surprise profit in the third quarter, but like jpmorgan, earnings were held down by legal charges. pink $16.7 billion to settle government mortgage investigations.
>> welcome back to the second half-hour of "bottom line." we start this half hour with breaking news. the fed chair said to voice confidence in the expansion amid foreign risks . are you surprised by this? >> this is something we were just discussing today. typically, what we are seeing is that janet yellen is doing her job as the fed chair. she is the grown up in the room
saying, look, there are global growth concerns, but as of right now, the u.s. recovery is ongoing. >> everybody calm down. that we arers show still showing signs of strength. >> those exact comments are what the statement for the october meeting when they meet later this month. ,espite global growth concerns the u.s. recovery is on track. >> michael mckee, this story that bloomberg is breaking now that chair yellen told everybody the economy looked to be on track to achieve growth of around 3% going forward. >> i'm not sure how much i'm going to read into this particular statement.
their meeting on the sidelines of the imf conference. janet yellen and other central bankers speak before that gro up and she gave the party line. fed is similar to what the 's forecast is for the growth of 2.6% going forward and inflation of 1.7%. she is talking the fed's party line. it may be significant in the context of the minutes that came out when the fed was quoted as worrying about the violence in foreign markets. that set off a chain reaction in financial markets. the fact she still queuing to the party line here is important. is that party line enough to calm the markets at this point? >> it depends on the context. our thinking was that janet yellen speaks on friday about
income inequality. that is prepared speech, but she have a few prepared remarks right before beginning that speech and that is what we would expect her to do. it is her job as the chair to step in and say let's all calm down. she is seeing the same thing we are. there is no forward-looking data that says this global growth concern has started to affect the u.s. economy. uptickre seeing a slight in the markets right now. these comments from chair yellen -- does that give a sense of urgency? markets continue to fall, it makes their job more couple kidded because they have to assess the feedback loop of
the markets. when you look at the other things going on, the drop in oil prices that should be overall a boost to growth, the change in the value of the dollar, there are some reasons to think they might be more concerned about how fast the economy could grow in the long run as long as inflation comes back up at some point. while it's more complicated, it isn't something they need to step in immediately and do. the markets are so high now on a percentage basis, it's nothing like the 1990's when we saw 500 point drops in the dow and alan had to get together with the treasury and support the economy and talk about how strong things work. me andael mckee joining toen standing with us
>> the white house press briefing is underway at this hour we will monitor the comments from the press secretary on the ebola crisis. president obama will hold a meeting at 3:30 p.m. washington time. president canceled a campaign trip to new jersey and connecticut to focus on ebola after that second health care worker in dallas contracted the virus. stay with bloomberg television for the latest on the ebola story. the s&p 500 lost as much as 3% today. the index has a raised its gains for the year.
stephanie ruhle joins me now you have been working phones, talking to hedge fund folks. >> when you have a day when the tenure goes from being 30 lower to 10 lower, it is pure volatility. we are seeing hedge funds get chopped up. some of the biggest hedge fund between 2-5%.own they have not even seen redemptions it. what types of products are they involved in? event driven. there is no liquidity. it is worse than august of 2011. these markets, the liquidity crunch is more like the crisis. when the crisis happened, we did not have dodd-frank. money accounts needed to sell, the banks took
those positions on. now come all they can do is act as agents. >> as you know, for most of this year, folks have been coming on bloomberg tv saying there is a lack of volatility. what turned to switch? >> this is separating the men from the boys. the poorve noticed fundamentals in the market for the last three years. when you have all of the central bank intervention, everyone is forgetting the financials and riding the waves. upy needed to beat or keep with the market because we spend so much time criticizing -- when the s&p starts its loss, these guys have to perform. >> where do they get covered? gete will see hedge funds carted out here. if the amount of hedging we saw this morning signifies we could be seen investors -- we had the fannie and freddie train go down.
it's a very -- the founder of is one of the most well-known macro managers out there. he is now 8% on the month. one of the concerns expressed was about ebola. does that factor into this? >> it factors into the panic mode and whether we are talking about slow growth, ebola come all of this is leading investors to not necessarily go short but simply say we don't feel confident. that doesn't help the fact that you need someone to step up and no one is doing it. >> stephanie ruhle joining me this afternoon. thank you so much. u.s. retailers are looking for a boost in positive pr. a new report suggest retail
wages are highly competitive with those in other industries. yang yang is in washington. this is the first time in love people that a lot of people are hearing that retail jobs are paying well. many of these jobs are minimum wage. what is the catch? >> the catch here is the report actually leaves out those low-paid workers. the research was released today by the retail federation, conducted by the university of georgia. to get an apples to apples comparison of retail pay versus not retail pay, the only focus -- they only focused on core retail jobs. disproportionate number of part-time and temporary workers that aren't as common in other industries. they have been significantly skewed. the report found that retail workers earn an average of $2582
per month. the permanent full-time retail workers between 25-54 actually made slightly more than it nonretail workers of the same age. the retail industry does employ a much larger share of -- if we do consider all retail workers, the average hourly wage is much lower. take from this report what you will. it offers an interesting snapshot of those career retail workers. of this report comes as retailers have come under scrutiny in the minimum wage fight. what is the national retail federation train to a compass this latest piece of research? .> its retail jobs week
they are trying to promote the benefit of retail jobs and negative misconceptions of retail employment and show that those who choose to stale and retail and ascend in the ranks can and do have well-paying jobs. when it comes to minimum wage legislation, the stances that now is not the right time -- the research is to educate policymakers. they released a separate report earlier this week touting the industry supports 42 million u.s. jobs. -- they calculations don't take into account those workers.ime >> i'm wondering if educate policymakers means sway policymakers. , the luxury resale
>> the second hand luxury market for apparel and accessories is estimated to be worth around $19 billion. one online retailer taking advantage of the market is the real real. it sells authenticated preowned jewelry andhion, j art. the ceo, julie wainwright joins me. this seems like a no-brainer. why hold onto an expensive item for life when you can sell it and get some of your money back? >> that was the light bulb that went on for me and we added next dressed up -- extra step. trust element. ebay, itnt stores,
seemed like the clear opportunity was to add trust and provide liquidity. >> is the reason sales of luxury goods are soaring -- is it the same marketing as luxury cars? >> luxury goods continue to grow. $200 billion worldwide. if you can get liquidity and get this beautiful browns like -- ada for ake prod fraction of the cost, it makes sense. that have a recent report says that leather goods and clothing are growing faster than the luxury industry overall. they make up $4 billion worth of the $19 billion secondhand
market. does the label give the goods a cachet that other used clothing doesn't have? >> it certainly has something to do with a label. luxury products are better made, better designed. if you look at something from five years ago, it still is relevant if you know how to wear it. think of rolex and watches. in some cases, they appreciate in value. >> is this a gender specific market? are more women involved than men? >> i would love to tell you that it wasn't more women than men, but it is still women focused. about 35% of our sales are men. luxury we tell market is almost equal to the women's market now.
>> what impact is this market having on outlets and other discounters who have made their name selling used goods? >> we are clearly doing it online. it is disrupting the marketplace because we can aggregate a large audience. ease fore incredible the sellers. we can actually come to people's what the let you know resale value is and take the items away and do the marketing. which is a lot easier than bringing things to a store and waiting to get your check. it is clearly a disruptor. it also gives liquidity. and transparent liquidity. >> your bio says you are passionate about high yields. would we find any louis vuitton shoes in your closet?
>> i absolutely have high high heels because i'm short, short. i want to be able to reach things when i get to the office. when you are 5'3", adding four-inch heels makes you high level with most people. is thee wainwright founder and ceo of the real real. joining us from san francisco. it has been a pleasure. thank you so much for your time. stay with us. we have another check of the market movers on the other side of the break. we are seeing stocks being sold off. dow jones industrial average down to earn 61 points. -- down 261 points. "bottom line" continues in just a moment. ♪
>> get the latest headlines at the top of the hour on bloomberg radio and streaming on your tablet and on bloomberg.com. mark crumpton reporting from new york. thank you so much for joining us. on the markets is next. i will see you tomorrow. ♪ passed the art. bloomberg tv is on the markets. the hour. we have an hour to go until the close of trading. still down almost 300 points on the dow jones. a very ugly day for the markets. around, a loting
of volatility throughout the session. they can be seen through the vix. we see this bike up and volatility that has been happening for the past couple of weeks. -- the spike up in volatility. you had volatility and then volatility. what we have seen today is pretty extraordinary in terms of the swings we have seen in a market where the dow opened lower by more than 350 points. it was almost down 400 points. what is going on here? >> you had the summer which was quiet historical standards. 60 something days without a 1% move. now, we are getting back-to-back days. .he vix is following along
we are seeing the treasury index vixe, the currency spike. the volatility of the volatility. how much the options cost to trade. they are getting sticker shock when they see how expensive they are. i have to do something like a call spread to lessen my cost outlay and provide cushion on the downside. >> once you have shaken it off, the initial craziness, you then turn to try to figure out what happens next. how do we try to figure out where we go from here? >> you look at the futures curve. the front end of that curve is spiked because we are seeing short-term spike in fear or
price volatility. outdated months are going to be trading under that. people will be watching the shift between short dated versus medium-term versus long-term. they will be looking at volumes. what is the order flow doing? think it is saying i is stretched too high here and i will play the downside. we see a spike like this, what tends to happen with equities? 2009, we are up one or 75%. it's very clear, every spike in -- we are up 175%. you look at 2002 or 2008, a